Technological lock-in developing countries: The role of external financing

Giuliano Toshiro Yajima and Lorenzo Nalin

Structural Change and Economic Dynamics, 2024, vol. 70, issue C, 494-502

Abstract: Liabilities denominated in foreign currency have established a permanent role in emerging market firms’ balance sheet, which implies that changes in both global liquidity conditions and in the value of the currency may have a long- lasting effect for them. In order to consider the financial conditions that may encourage (discourage) structural change in a small, open economy, we adopt the framework put forward by the “Monetary theory of distribution” (MTD). More specifically, we follow the formulation adopted by Dvoskin and Feldman (2019), whereby the financial system is intended as a basic sector that promotes innovation (Schumpeter, 1911). In accordance to this, financial conditions are binding only for the innovative entrepreneurs, whose methods of production are not dominant and hence they need to borrow from banks to kick- start their production. Through this device, our model offers an explanation to the technological lock-in experienced by a small, open economy which takes international prices as given.

Keywords: Foreign exchange policy; Currency mismatches; Structural change (search for similar items in EconPapers)
JEL-codes: E7 F31 F37 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0954349X24000754
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:70:y:2024:i:c:p:494-502

DOI: 10.1016/j.strueco.2024.05.014

Access Statistics for this article

Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

More articles in Structural Change and Economic Dynamics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().